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After reading case 1-1 Standard Setting: “A Political Aspect” in the textbook, write an essay that includes the following elements: A formal introduction. Answers to questions (a) through (d) of the case, focusing on the role of accounting standard setting in the private sector. A conclusion. Your submitted paper should be at least 2-3 pages long following APA style, and properly referenced. Case Study: “This case consists of a letter from Dennis R. Beresford, chairperson of the Financial Account- ing Standards Board, to Senator Joseph I. Lieberman. The specific issue was proposed legis- lation relating to the accounting for employee stock options. Permission to reprint the following letter was obtained from the Financial Accounting Standards Board. August 3, 1993 Senator Joseph I. Lieberman United States Senate Hart Senate Office Building Room 316 Washington, DC 20510 Dear Senator Lieberman: Members of the Financial Accounting Standards Board (the FASB or the Board) and its staff routinely consult with members of Congress, their staffs, and other government officials on matters involving financial accounting. For example, FASB members and staff met with Senator Levin both before and after the introduction of his proposed legis- lation, Senate Bill 259, which also addresses accounting for employee stock options. The attachment to this letter discusses the accounting issues (we have not addressed the tax issues) raised in your proposed legislation, Senate Bill 1175, and issues raised in remarks introduced in the Congressional Record. My comments in this letter address an issue that is more important than any particular legislation or any particular accounting issue: why we have a defined process for setting financial reporting standards and why it is harmful to the public interest to distort accounting reports in an attempt to attain other worthwhile goals.” “Financial Reporting Markets are enormously efficient information processors—when they have the infor- mation and that information faithfully portrays economic events. Financial state- ments are one of the basic tools for communicating that information. The U.S. capital market system is well-developed and efficient because of users’ confidence that the fi- nancial information they receive is reliable. Common accounting standards for the preparation of financial reports contribute to their credibility. The mission of the FASB, an organization designed to be independent of all other business and professio- nal organizations, is to establish and improve financial accounting and reporting standards in the United States. Investors, creditors, regulators, and other users of financial reports make business and economic decisions based on information in financial statements. Credibility is critical whether the user is an individual contemplating a stock investment, a bank making lending decisions, or a regulatory agency reviewing solvency. Users count on financial reports that are evenhanded, neutral, and unbiased. An efficiently functioning economy requires credible financial information as a ba- sis for decisions about allocation of resources. If financial statements are to be useful, they must report economic activity without coloring the message to influence behavior in a particular direction. They must not intentionally favor one party over another. Financial statements must provide a neutral scorecard of the effects of transactions. Economic Consequences of Accounting Standards The Board often hears that we should take a broader view, that we must consider the economic consequences.